Yahoo 2006 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 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

• we may be required to “make good” on our obligations by providing additional advertising or alternative services;
• the partners of co-brand services may not renew the arrangements or may renew at lower rates; and
• the arrangements may not generate anticipated levels of shared transactions revenue, or partners may default on
the payment commitments in such agreements as has occurred in the past.
Accordingly, any leveling off or decrease of our user base (or usage by our existing base) or the failure to generate
anticipated levels of shared transactions revenue could result in a significant decrease in our revenues.
Decreases or delays in advertising spending by our advertisers due to general economic conditions could
harm our ability to generate advertising revenue.
Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying
patterns. Since we derive most of our revenues from advertising, any decreases in or delays in advertising spending
due to general economic conditions could reduce our revenues or negatively impact our ability to grow our
revenues.
Financial results for any particular period do not predict results for future periods.
There can be no assurance that the purchasing pattern of advertisers on the Yahoo! Properties will not fluctuate, that
advertisers will not make smaller and shorter-term purchases, or that market prices for online advertising will not
decrease due to competitive or other factors. In addition, there can be no assurance that the volume of searches
conducted, the amounts bid by advertisers for search marketing listings or the number of advertisers that bid in our
search marketing marketplace will not vary widely from period to period. As revenues from new sources increase, it
may become more difficult to predict our financial results based on historical performance. You should not rely on
the results for any period as an indication of future performance.
We estimate tax liabilities, the final determination of which is subject to review by domestic and interna-
tional taxation authorities.
We are subject to income taxes and other taxes in both the United States and the foreign jurisdictions in which we
currently operate or have historically operated. We are also subject to review and audit by both domestic and foreign
taxation authorities. The determination of our worldwide provision for income taxes and current and deferred tax
assets and liabilities requires judgment and estimation. In the ordinary course of our business, there are many
transactions and calculations where the ultimate tax determination is uncertain. Although we believe our tax
estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our
consolidated financial statements and may materially affect our income tax provision, net income or cash flows in
the period or periods for which such determination is made.
We rely on the value of our brands, and a failure to maintain or enhance the Yahoo! brands in a cost-effec-
tive manner could harm our operating results.
We believe that maintaining and enhancing our brands, including those that contain the Yahoo! name as well as
those that do not, is an important aspect of our efforts to attract and expand our user and advertiser base. We also
believe that the importance of brand recognition will increase due to the relatively low barriers to entry in the
Internet market. We have spent considerable money and resources to date on the establishment and maintenance of
our brands, and we anticipate spending increasing amounts of money on, and devoting greater resources to,
advertising, marketing and other brand-building efforts to preserve and enhance consumer awareness of our brands.
We may not be able to successfully maintain or enhance consumer awareness of our brands and, even if we are
successful in our branding efforts, these efforts may not be cost-effective. If we are unable to maintain or enhance
customer awareness of our brands in a cost-effective manner, our business, operating results and financial condition
could be harmed.
18