Yahoo 2006 Annual Report Download - page 26

Download and view the complete annual report

Please find page 26 of the 2006 Yahoo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 126

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126

listing them in the access provider’s or manufacturer’s own directory or by providing Yahoo! with less prominent
listings than the access provider, manufacturer, or a competitor’s offerings. Such access providers and manufac-
turers may prove better able to target services and advertisements to the preferences of their users. If such access
providers and device manufacturers are more successful than we are in developing compelling products or
attracting and retaining customers, users or advertisers, then our revenues could decline. Further, to the extent that
Internet access providers, mobile service providers or network providers increase the costs of service to users or
restrict Yahoo!’s ability to deliver products, services and content to end users or increase our costs of doing so, our
revenues could decline.
We also compete for customers, users and advertisers with many other providers of online services, including
destination websites and social media and networking sites. Some of these competitors may have more expertise in
a particular segment of the market, and within such segment, have longer operating histories, larger advertiser or
user bases, and more brand recognition or technological features than we offer.
In the future, competitors may acquire additional competitive offerings, and if we are unable to complete strategic
acquisitions or investments, our business could become less competitive. Further, competitors may consolidate
with each other to become more competitive, and new competitors may enter the market. If our competitors are
more successful than we are in developing compelling products or attracting and retaining users, advertisers or
customers, then our revenues and growth rates could decline.
We face significant competition from traditional media companies which could adversely affect our future
operating results.
We also compete with traditional media companies for advertising. Most advertisers currently spend only a small
portion of their advertising budgets on Internet advertising. If we fail to persuade existing advertisers to retain and
increase their spending with us and if we fail to persuade new advertisers to spend a portion of their budget on
advertising with us, our revenues could decline and our future operating results could be adversely affected.
If we are unable to provide search technologies and other services which generate significant traffic to our
websites, or we are unable to enter into or continue distribution relationships that drive significant traffic to
our websites, our business could be harmed, causing our revenues to decline.
We have deployed our own Internet search technology to provide search results on our network. We have more
limited experience in operating our own search service than do some of our competitors. Internet search is
characterized by rapidly changing technology, significant competition, evolving industry standards and frequent
product and service enhancements. We must continually invest in improving our users’ experience, including
search relevance, speed and services responsive to their needs and preferences, to continue to attract, retain and
expand our user base. If we are unable to provide search technologies and other services which generate significant
traffic to our websites, or if we are unable to enter into distribution relationships that continue to drive significant
traffic to our websites, our business could be harmed, causing our revenues to decline.
The majority of our revenues are derived from marketing services, and the reduction in spending by or loss
of current or potential advertisers would cause our revenues and operating results to decline.
For the year ended December 31, 2006, 88 percent of our total revenues came from marketing services. Our ability
to continue to retain and grow marketing services revenue depends upon:
• maintaining our user base;
• maintaining our popularity as an Internet destination site;
• broadening our relationships with advertisers to small- and medium-sized businesses;
• attracting advertisers to our user base;
• increasing demand for our marketing services by advertisers, users, businesses and affiliates, including prices
paid by advertisers, the number of searches performed by users, the rate at which users click-through to
commercial search results and advertiser perception of the quality of leads generated by our marketing services;
16