Yahoo 2006 Annual Report Download - page 33

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services. General economic conditions as well as the rapidly evolving competitive landscape may affect users’
willingness to pay for such services. If we cannot generate revenues from these services that are greater than the
cost of providing such services, our operating results could be harmed.
We expect our operating expenses to continue to increase as we attempt to expand the Yahoo! brand, fund
product development, develop media properties and acquire other businesses or technologies, which could
harm our operating results.
We currently expect that our operating expenses will continue to increase as we expand our operations in areas of
expected growth, continue to develop and extend the Yahoo! brand, fund greater levels of product development,
develop and commercialize additional media properties and premium services, and acquire and integrate com-
plementary businesses and technologies. If our expenses increase at a greater pace than our revenues, our operating
results could be harmed.
If we are unable to retain our existing senior management and key personnel and hire new highly skilled
personnel, we may not be able to execute our business plan.
We are substantially dependent on the continued services of our senior management, including our two founders,
our chief executive officer, chief financial officer, chief technical officer, and our executive and senior vice
presidents. These individuals have acquired specialized knowledge and skills with respect to Yahoo! and its
operations. The loss of any of these individuals could harm our business. Our business is also dependent on our
ability to retain, hire and motivate talented, highly skilled personnel. The competition for such executives and for
other highly skilled personnel can be intense, particularly in the San Francisco Bay Area, where our corporate
headquarters, and the headquarters of several of our vertical and horizontal competitors, are located. If we do not
succeed in recruiting, retaining and motivating our key employees and in attracting new key personnel, we may be
unable to meet our business plan and as a result, our stock price may decline.
More individuals are utilizing non-PC devices to access the Internet, and versions of our service developed
or optimized for these devices may not gain widespread adoption by users, manufacturers or distributors of
such devices.
The number of individuals who access the Internet through devices other than a personal computer, such as personal
digital assistants, mobile telephones, televisions and set-top box devices, has increased dramatically, and the trend is
likely to continue. Our services were originally designed for rich, graphical environments such as those available on
desktop and laptop computers. The lower resolution, functionality and memory associated with alternative devices
currently available may make the use of our services through such devices difficult, and the versions of our service
developed for these devices may not be compelling to users, manufacturers or distributors of alternative devices. As
we have limited experience to date in operating versions of our service developed or optimized for users of
alternative devices, and as new devices and new platforms are continually being released, it is difficult to predict the
problems we may encounter in doing so, and we may need to devote significant resources to the creation, support
and maintenance of such versions. If we are unable to attract and retain a substantial number of alternative device
manufacturers, distributors and users to our online services, we may fail to capture a sufficient share of an
increasingly important portion of the market for online services and may fail to attract both advertisers and premium
service subscribers.
We plan to expand operations in international markets in which we may have limited experience or rely on
business partners.
We plan to expand Yahoo! branded online properties and search offerings in international markets. We have
currently developed, through joint ventures, strategic investments, subsidiaries and branch offices, localized
offerings in over 20 countries outside of the United States. As we expand into new international markets, we will
have only limited experience in marketing and operating our products and services in such markets. In other
instances, including our strategic investment in Alibaba, we may rely on the efforts and abilities of foreign business
partners in such markets. Certain international markets may be slower than domestic markets in adopting the
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