Yahoo 2006 Annual Report Download - page 32

• the impairment of relationships with customers and partners of the companies we acquired or in which we
invested or our customers and partners as a result of the integration of acquired operations;
• the impairment of relationships with employees of the acquired companies or our employees as a result of
integration of new management personnel;
• the difficulty of integrating the acquired company’s accounting, management information, human resources and
other administrative systems;
• our lack of, or limitations on, our control over the operations of our joint venture companies;
• in the case of foreign acquisitions, uncertainty regarding foreign laws and regulations and difficulty integrating
operations and systems as a result of cultural, systems and operational differences; and
• the impact of known potential liabilities or unknown liabilities associated with the companies we acquired or in
which we invested.
We are likely to experience similar risks in connection with our future acquisitions and strategic investments. Our
failure to be successful in addressing these risks or other problems encountered in connection with our past or future
acquisitions and strategic investments could cause us to fail to realize the anticipated benefits of such acquisitions or
investments, incur unanticipated liabilities and harm our business generally.
Our failure to manage growth, diversification and changes to our business could harm us.
We are continuing to grow, diversify and evolve our business both in the United States and internationally. As a
result of the diversification of our business, personnel growth, acquisitions and international expansion in the recent
years, more than one-half of our employees are now 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.
As we grow and diversify our business, we must also expand and adapt our operational infrastructure. Our business
relies on our data systems, billing systems for our fee-based services, and other operational and financial reporting
and control systems. All of these systems have become increasingly complex in the recent past due to the growing
diversification and complexity of our business, to acquisitions of new businesses with different systems and to
increased regulation over controls and procedures. To effectively manage our technical support infrastructure, we
will need to continue to upgrade and improve our data systems, billing systems, and other operational and financial
systems, procedures and controls. In particular, as our fee-based services for which we bill users grow, any failure
of our billing systems to accommodate the increasing number of transactions and accurately bill users could
adversely affect our business and ability to collect revenue. These upgrades and improvements will require a
dedication of resources and in some cases are likely to be complex. If we are unable to adapt our systems in a timely
manner to accommodate our growth, our business may be adversely affected.
To better and more efficiently manage our business, we recently announced, and are currently implementing, a
reorganization of our structure and management to align our operations with our key customer groups — audiences
and advertisers. Implementing the reorganization requires significant time and resource commitments from our
senior management. In the event that we are unable to effectively implement the reorganization, we are unable to
recruit or retain key employees as a result of the reorganization or the reorganization does not yield the anticipated
benefits, 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 and will continue to invest in new products and services. Some of these new products and services may
not be profitable or may not meet anticipated user adoption rates. We have previously discontinued certain non-
profitable premium services and may discontinue others. 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
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